I just want somewhere to live, honestly.
March 3, 2008 11:15 PM Subscribe
Am I about to get screwed over in regards to the house I'm buying, that's currently being renovated?
The story:
Moving to a new city (Hobart, Australia) for a job in about 7 weeks.
We went there in January to look at houses, found one that was far superior to others, but that was currently having some minor renovations done; new carpets, some rendering on the external walls. We made an offer subject to finance being approved.
Applied for a loan through a mortgage broker. Mortgage broker was incompetent, loan was denied.
Applied for a loan through someone else, loan got conditional approval.
Mortgage lenders sent a valuer to the house, discovered that the renovations to be complete were not clearly stated in the contract, and they couldn't loan me the amount I was asking for the property.
My solicitor gets an extension to the date for finance approval, obtains an undertaking that the renovations will be complete.
Today arrives. The day finance is supposed to be approved by. Mortgage lender rings me and tells me the finance now won't be approved until the renovations have actually been completed to a satisfactory standard, "for my protection".
So, we're now past the close of business on the day that finance was supposed to be approved by, and my vendors are going to be told that they have to have the renovations complete before my loan is approved. Except they haven't been told that yet, because everyone seems to be missing everyone else's phone calls.
Question: Am I about to be fucked over? It seems the risks in this situation lie completely with me. The vendors could pull out of the deal tomorrow. Or, the vendors could do the renovations, the bank could say they're not good enough and I don't get the house, but the vendors just go on and try to sell it to someone else.
I know this is probably a bit of a hazy question, with too many personal factors involved, but has anyone else had experience in situations like this? Are vendors likely to pull out of a deal because we keep asking for finance extensions? Or does the fact that we've been going about this for so long mean they're likely to stick with it? Is the bank leading me on? Does this sort of thing, demanding renovations are complete before approving the loan, happen often?
The story:
Moving to a new city (Hobart, Australia) for a job in about 7 weeks.
We went there in January to look at houses, found one that was far superior to others, but that was currently having some minor renovations done; new carpets, some rendering on the external walls. We made an offer subject to finance being approved.
Applied for a loan through a mortgage broker. Mortgage broker was incompetent, loan was denied.
Applied for a loan through someone else, loan got conditional approval.
Mortgage lenders sent a valuer to the house, discovered that the renovations to be complete were not clearly stated in the contract, and they couldn't loan me the amount I was asking for the property.
My solicitor gets an extension to the date for finance approval, obtains an undertaking that the renovations will be complete.
Today arrives. The day finance is supposed to be approved by. Mortgage lender rings me and tells me the finance now won't be approved until the renovations have actually been completed to a satisfactory standard, "for my protection".
So, we're now past the close of business on the day that finance was supposed to be approved by, and my vendors are going to be told that they have to have the renovations complete before my loan is approved. Except they haven't been told that yet, because everyone seems to be missing everyone else's phone calls.
Question: Am I about to be fucked over? It seems the risks in this situation lie completely with me. The vendors could pull out of the deal tomorrow. Or, the vendors could do the renovations, the bank could say they're not good enough and I don't get the house, but the vendors just go on and try to sell it to someone else.
I know this is probably a bit of a hazy question, with too many personal factors involved, but has anyone else had experience in situations like this? Are vendors likely to pull out of a deal because we keep asking for finance extensions? Or does the fact that we've been going about this for so long mean they're likely to stick with it? Is the bank leading me on? Does this sort of thing, demanding renovations are complete before approving the loan, happen often?
Best answer: I don't know definitely, but here's a couple of things that might relieve you until you can get hold of someone. Houses in Tasmania are pretty much dirt cheap = hard to sell. I suspect the vendor will hold on to you despite your problems because you agreed to their price. Secondly, interest rates just went up AGAIN! So the housing market should slow some more, which makes you even more desirable.
We've had problems with the bank in the past, but it was really a matter of jumping through the hoops they wanted, and in our particular circumstances, those hoops actually were a good idea, but it didn't feel like it.
When we bought this house, we said we wanted x, y and z done as a condition of sale. X and Y were done, but we were so excited to be in our first place, that we didn't even check Z for a month, and it wasn't done, and there pretty much seemed to be no way of making the vendor do Z - the money had changed hands, we'd moved in, we'd basically said everything was fine. So, having to wait until the renovations are done is probably a good thing and should help them to get them done quicker.
Leave the conversations up to your lawyer. It's easy to agree to something that seems reasonable at the time (the real estate agent or the vendor is screaming at you and you feel bad for them) but not a good idea.
And lastly, if you can't have that house, just wait a week or two, there'll be a few more on the market I think. And in the meantime rents are pretty low. It'll work out, one way or another.
posted by b33j at 2:29 AM on March 4, 2008
We've had problems with the bank in the past, but it was really a matter of jumping through the hoops they wanted, and in our particular circumstances, those hoops actually were a good idea, but it didn't feel like it.
When we bought this house, we said we wanted x, y and z done as a condition of sale. X and Y were done, but we were so excited to be in our first place, that we didn't even check Z for a month, and it wasn't done, and there pretty much seemed to be no way of making the vendor do Z - the money had changed hands, we'd moved in, we'd basically said everything was fine. So, having to wait until the renovations are done is probably a good thing and should help them to get them done quicker.
Leave the conversations up to your lawyer. It's easy to agree to something that seems reasonable at the time (the real estate agent or the vendor is screaming at you and you feel bad for them) but not a good idea.
And lastly, if you can't have that house, just wait a week or two, there'll be a few more on the market I think. And in the meantime rents are pretty low. It'll work out, one way or another.
posted by b33j at 2:29 AM on March 4, 2008
you are moving to hobart??? Why?
To your question, though ... depends entirely on your contract of sale, have you paid a deposit yet? If you can't complete at the required time (or hve a financing issue) you may have an issue (or not) ... it will be spelt out in the contract. And how can the vendors pull out tomorrow? You do have a contract of sale, don't you?
Basically, speak to your lawyer. And IAA (australian) L (But IANYL, TINLA, etc) and that is about the best advice I can give with these details.
posted by jannw at 9:13 AM on March 4, 2008
To your question, though ... depends entirely on your contract of sale, have you paid a deposit yet? If you can't complete at the required time (or hve a financing issue) you may have an issue (or not) ... it will be spelt out in the contract. And how can the vendors pull out tomorrow? You do have a contract of sale, don't you?
Basically, speak to your lawyer. And IAA (australian) L (But IANYL, TINLA, etc) and that is about the best advice I can give with these details.
posted by jannw at 9:13 AM on March 4, 2008
What's the worst that can happen? You miss out on a decent house that you like but aren't in love with. The transaction costs so far are currently close to zero, you don't have liabilities? You will have to rent for a while but can spend time looking more properly.
I don't think it can possibly hurt to tell the vendor exactly what the situation is and why there is a possible hold-up. You build rapport and they trust that you're not seeking to pull out of the deal. Don't leave it up to the lawyers, they're busy, and charging you per every 6 minutes, and probably don't care, particularly if you're on a fixed fee.
The Bank, if it's a big one, isn't leading you on, they have a list of boring tick-box requirements that they have to fill. It's not at all personal for them, they have no interest in leaving your file open a minute longer than necessary, they want you to start paying them back asap.
Good luck with Hobart - I like the place. Paul Lennon gives me the willies though.
posted by wilful at 10:30 PM on March 4, 2008
I don't think it can possibly hurt to tell the vendor exactly what the situation is and why there is a possible hold-up. You build rapport and they trust that you're not seeking to pull out of the deal. Don't leave it up to the lawyers, they're busy, and charging you per every 6 minutes, and probably don't care, particularly if you're on a fixed fee.
The Bank, if it's a big one, isn't leading you on, they have a list of boring tick-box requirements that they have to fill. It's not at all personal for them, they have no interest in leaving your file open a minute longer than necessary, they want you to start paying them back asap.
Good luck with Hobart - I like the place. Paul Lennon gives me the willies though.
posted by wilful at 10:30 PM on March 4, 2008
This thread is closed to new comments.
posted by Jimbob at 11:25 PM on March 3, 2008